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DeLay: Restoring Fairness to the Tax Code
 Bill Ends Discrimination Against Texas Families

WASHINGTON – House Majority Leader Tom DeLay (R-Texas) today said the American Jobs Creation Act, which passed the House tonight by a vote of 280-141, will meet America’s obligation to the World Trade Organization, make U.S. companies more competitive in today’s global marketplace, and rectify a long-standing injustice in the federal tax code by restoring state sales tax deductibility.

“This is a targeted tax cut at families in seven states who have been discriminated against in the law for too long,” DeLay said.  “Starting next April, everyone in Texas will be able to deduct every dollar of state sales tax they pay.  I know a lot of people didn’t think we could get this done, but we never gave up, and soon the tax code will be fairer to Texans and the residents of six other states.”

In addition to strengthening global competitiveness, the American Jobs Creation Act includes an important provision for Texas taxpayers.  Currently the residents of 43 states are allowed to deduct their state income tax from their federal taxable income.  This means that residents of states like Texas, which does not have a state income tax, carry a higher burden of federal taxes.  The American Jobs Creation Act corrects this inequity in the tax code by allowing taxpayers to deduct either their state income tax or their state and local sales taxes in 2004 and 2005. 

“The logic is simple: if state income taxes are deductible on your federal income tax return, then your sales tax should be deductible too, if that’s how your home state chooses to generate revenue,” DeLay added.  

The American Jobs Creation Act will do the following:

-  Reduce the corporate tax rate for domestic manufacturers from 35 percent to 32 percent;

- Provide additional tax relief for small businesses, especially small manufacturing companies;

- Enhance the competitiveness of U.S.-based companies engaged in the global economy;

- Extend more than 20 expiring tax relief provisions; and

- Provide taxpayers in every state the choice to deduct either state and local income taxes or state and local sales taxes.